FIRST QUARTER 2018 GREENWICH MARKET STATS: HIGH END UP; LOW END DOWN

First Quarter Market Statistics 2018 for Greenwich can only be described as “An Enigma”. While March 2018 ended with Inventory up +5.8%, Unit sales down -19% and Sales Volume down -14.1% versus last year, the Average Sale Price and Median Sale Price are up +6.1% and +6.8% respectively.

For the second year in a row, first quarter sales in the upper end of the market ($4M+ range) have done better than the previous year. Meanwhile the lower end of the market– once the stalwart segment– has slipped. There are a number of hypotheses as to why….

Some of my colleagues think that the unusually stormy weather in March this year may have affected the market in a negative way. Some say that that it could be the changes in the federal tax laws that have encouraged the high- end buyers to buy Greenwich with its lower property taxes while, at the same time, discouraging lower- end buyers with the elimination of the ability to deduct property and state taxes. The reduction in the amount that one can deduct for their mortgage for new loans, from $1M to $750,000, also has a negative effect on the lower- end. The increase in mortgage rates could also be negatively affecting the lower- end buyers because most of them need to obtain a mortgage in order to buy a home and the increased rates may be a deal breaker. And, there are some of my colleagues that think the spring market has simply been delayed…

Not surprisingly, inventory is up in all price segments below $3M and down in all price segments above $3M. And, not surprisingly, Contracts are down in the price ranges below $3M but, up +13% in the $3-4M range, up an astounding +71% in the $4-5M range and up +100% in the over $10M range (this is the difference of one additional house sold in Jan-March 2018 versus Jan-March 2018!) Since contracts are predictors of future sales, we can look forward to a bump up in our unit sales in these price ranges a couple of months down the road. There is light at the end of the tunnel since May is often the month in which we have the most homes go to Contract.

Meanwhile, unit sales in the first quarter of this year, are up +25% in the below $1M category. This is because inventory is up in this range and, since this is the entry level, when inventory is up, we can sell it! Sales in the $1-4M ranges are down and, in the $4M-$10M range, are even with first quarter last year. Above $10M, sales are up +50%, representing one additional home sold this year versus last. This increase in sales in the high end accounts for the increases in the Average and Median Sales Prices…

My first hand experience at recent Public Open Houses at my listing at 11 Leslie Avenue has been that buyers from New York are in Greenwich looking. Property taxes can be 3 times higher in West Chester County and New York City than they are in Greenwich. New York State residents also have the Mortgage Tax and the Mansion Tax that Connecticut does not have. It makes sense that, if homeowners are no longer able to write off their property taxes, that they would be looking to live in a state with lower property taxes!!

There are only five states in the country who tax their residents more than CT, according to Daniel M. Fitzpatrick in his column in the Greenwich Sentinel, “Hang in There!”, dated March 2, 2018. Connecticut’s “effective total sate and local tax rate” is 13.56%, he said. (See https://wallethub.com/edu/best-worst-states-to-be-a-taxpayer/2416/.)

The state income tax has prompted a departure of Connecticut’s millionaires (and others) who had settled primarily in Fairfield County, within commuting distance of New York City. Connecticut’s population peaked in 2013, according to Fitzpatrick, and dropped below the 2010 level by 2016.

Another factor contributing to this exodus is the Connecticut “Estate Tax” or “Death Tax” as it is more commonly known, Fitzpatrick said. The new state budget raised the individual exemption for estate and gift taxes to $2.6M in 2018 and to $3.6M in 2019, he said. And, starting in 2020, Connecticut will match the new federal exemption ($11.2M per person and $22.4M per married couple).

So this move by the Connecticut State Legislature should be applauded for improving Connecticut’s competitive positioning in the country. Likewise, the Board of Estimate and Taxation in Greenwich should be applauded for keeping the mill rate at the same level in 2018 as it was in 2017 thereby, keeping property taxes low. Every little bit helps, along with Greenwich’s superior amenities such as outstanding schools, restaurants and entertainment, as well as its close proximity to New York, to make it one of the most desirable locations in which to live.

For a detailed Market Statistics Report, click on “View Report”

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